As supply chain, labour and inflation storm clouds gathered on the horizon, City investors toasted an overflowing dividend pot and the end of this summer – boosted by the FTSE’s mining, oil and banking companies.
Total UK dividends soared to £34.9bn in the three months to 30 September, up by nearly 90 per cent on the same time last year, according to figures out today from Link Group.
Its UK Dividend Monitor was swollen by one-off dividends and bumper payouts from mining, banking and oil companies in the third quarter, but even stripping out these special divis, underlying growth was 52.6 per cent to £27.7bn.
A huge third quarter –where mining dividends accounted for £1 in every £4 returned to investors – has meant Link Group has upgraded its prediction for total dividends paid out this year to a whopping £93.2bn.
If full-year payouts reach that level it’ll be a 44.8 per cent rise on 2020.
Ian Stokes, managing director for corporate markets in the UK and Europe at Link Group said the £7.2bn boom in special divis in the third quarter was a result of some miners in particular making “catch-up payments” while others could pay out after selling assets at a time of higher prices and cash-rich potential buyers.
However, only five sectors are at dividend levels higher than in 2019, illustrating the long tail of Covid’s impact.
Stokes said the recovery in payouts had been uneven across sectors.
“We have consistently seen companies deliver more in dividends than we thought likely at the beginning of the year, in the depths of the UK’s longest, strictest lockdown.
“More over, companies were progressively less impacted by each lockdown and many of them took action to bolster their balance sheets in 2020, either with new borrowing, new qeuity issuance, or cost cutting – including dividends. Dividend firepower is now much stronger as a result”.
Link Group said there may be more headwinds in 2022, but still expected growth.